02-14-11 Regular Meeting of Fiscal Affairs Committee

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CITY OF LA PORTE, TEXAS Notes to the Financial Statements September 30, 2010 1. Summary of significant accounting policies — Continued Governmental funds reported unearned revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Revenue recognition is also deferred in connection with resources that have been received, but not yet earned in the proprietary funds. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental and proprietary funds were as follows: Unavailable Unearned Nonmajor General Governmental General Total Delinquent property taxes receivable $ 197,719 $ 62,790 $ - $ 260,509 Court fines 136,772 - - 136,772 Emergency medical services 896,000 - - 896,000 Mowing and demolition services 403,767 - - 403,767 Hotel taxes - 45,534 - 45,534 Intergovernmental services - - 112,344 112,344 Grant revenues - 250 - 250 Miscellanous 3,690 - - 3,690 Total deferred / uneamed revenue $ 1,637,948 $ 108,574 $ 112,344 $ 1,858,866 H. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenditures, and expenses during the reporting period. Actual results may differ from those estimates. I. Indirect Expense Allocations It is the policy of the City not to allocate indirect expenses to various functions in the Government -wide Statement of Activities. J. Restricted Assets The City applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. K. Inventories Inventories consist of material and supplies and are valued at cost (first -in, first -out). Inventories for all funds consist of expendable supplies held for consumption and the cost thereof is recorded as an expenditure at the time individual inventory items are issued. Reported inventories in the Governmental Funds are offset by a fund balance reserve, which indicates they are unavailable for appropriation even though they are a component of net current assets. L. Interfund Transactions Transactions between funds that would be treated as revenues, expenditures or expenses if they involved organizations external to the governmental unit are accounted for as revenues, expenditures or expenses in 50